SEC v. GENE DANIEL LEVOFF, No. 2:19-cv-05536, District of New Jersey (July 8, 2024)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION,
Plaintiff,
V.
GENE DANIEL LEVOFF,
Defendants.
Civ. No. 2:19-cv-05536 (WJM)
OPINION
WILLIAM J. MARTINI, U.S.DJ.:
In this action by the United States Securities and Exchange Commission ("SEC or
"Plaintiff) against Gene Daniel Levoff("Levoff or "Defendant") for insider trading, the
SEC moves for summary judgment pursuant to Fed. R. Civ. P. 56. ECF No. 22. Defendant
cross moves for summary judgment. For the reasons set forth below, the SEC's motion for
summary judgment is granted. Defendant's cross motion for summary judgment is
denied.
I. BACKGROUND AND PROCEDURAL HISTORY
From 2008 to 2013, Levoffwas Director of Corporate Law at Apple. SEC Statement
of Undisputed Material Facts ("SEC SUMF") ^ 1, ECF No. 22-2. From 2013 until his
termination in September of 2018, he was Senior Director of Corporate Law at Apple,
reporting directly to the General Counsel. Id. Levoffalso served on Apple's Disclosure
Committee from September 2008 to July 2018, including as chair of the committee from
December 2012 to July 2018. Id. at ^ 1, 5. Thus, he had access to and obtained Apple's
draft SEC filings and earnings materials before Apple disclosed its quarterly and yearly
financial results to the public. Id. Levoff was subject to certain company-imposed
"blackout periods" that prohibited him and others like him with access to material
nonpublic information from engaging in trades involving Apple stock. Id at ^ 6. From
approximately February 2018 until September 2018, Levoffwas also Apple's Corporate
Secretary. Id. at ^| 4. I-Iis responsibilities included ensuring compliance with Apple's Insider
Trading Policy, which prohibited the unauthorized disclose of any nonpublic information
acquired in the workplace and the misuse of material nonpublic information in securities
trading. Id.
From at least as early as April of 2011 through at least as late as April of 2016,
Levoff converted the material nonpublic information regarding Apple to his own use by
executing trades involving Apple stock in his accounts in violation of Apple's Insider
1

Trading Policy and during Apple blackout periods, realizing profits and avoided losses of
over $600,000. Id. at fl 7,9,10.
On February 13, 2019, a criminal complaint was filed against Levoff(Wv. Levoff,
19-cr-00780). DecL of Elizabeth Daisy ("Daisy Decl.") 1[ 2 (Grim. CompL), ECF No. 22-
3. On October 24, 2019, a federal grand jury returned a twelve-count Indictment charging
Levoff with securities fraud and wire fraud in connection with purchase and sale
transactions in Apple stock in 2015 and 2016. Cert. of Kevin Marino ("Marino Cert."), ^ 3
(Indictment), ECF No. 27; Levoff Statement of Undisputed Material Fact ("Def. SUMF")
Tf 2. On June 30, 2022, Levoff entered into an agreement, pleading guilty to Counts 1-6 of
the Indictment, and to securities fraud in violation of 15 U.S.C. § 78j(b), 17 C.F.R. §
240.10b-5, 18 U.S.C. §2, and other provisions. Daisy Decl.T; 3 (Plea Agmt); SEC SUMF
^ 2. Levoff admitted that in furtherance of the scheme described in the Indictment, he acted
knowingly and willfully in connection with the trades he placed including:
A. On July 17, 2015, Levoffsold approximately 43,750 shares of Apple stock;
B. On July 17, 2015, Levoffsold approximately 8,700 shares of Apple stock;
C. On July 20, 2015, Levoffsold approximately 7,000 shares of Apple stock;
D. On July 21, 2015, Levoffsold approximately 17,678 shares of Apple stock;
E. On October 26, 2015, Levoff purchased approximately 10,000 shares of Apple
stock;
F. On April 21, 2016, Levoffsold approximately 4,009 shares of Apple stock.
SEC SUMF ^ 2, 10. The total ofLevoffs profits and losses avoided for Trades A through
F above is $382,480. Id. at T[ 11.
On December 11, 2023, Levoffwas sentenced to four years' probation, 2,000 hours
of community service, a fine of $30,000, and forfeiture of $604,000 in realized gains and
avoided losses alleged in the Indictment. Def. SUMF ^ 4; Sentencing Tr. 35:16-37:12. The
forfeiture has been satisfied. Marino Cert. ^ 6 (Satisfaction of Judgment).
Because Levoff has admitted to engaging in Insider trading, the SEC moves for
summary judgment on the grounds that Levoffis collaterally estopped from re-litigating
those issues and thus there are no genuine issues of material fact. Moreover, the SEC deems
disgorgement of $382,480 and prejudgment interest of $57,465 satisfied by Levoffs
forfeiture payment. Levoff does not challenge finding him liable for insider trading,
enjoining him from further violations of the securities laws, and permanently barring him
from serving as an officer or director of a public company. The only dispute is whether,
Levoff should be ordered to pay a penalty of $1,147,440 - treble Levoffs profit obtained
or loss avoided. As discussed below, the SEC's requested monetary penalty is granted.

II. DISCUSSION
A. Standard
Federal Rule of Civil Procedure 56(a) provides that summary judgment is proper
when "the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." "A fact is 'material' ... if its existence
or nonexistence might Impact the outcome of the suit under the applicable substantive law."
SantM v. Fzientes, 795 F.3d 410, 416 (3d Cir. 2015) (quoting Anderson v. Liberty Lobby,
Inc. ,477 U.S. 242,248 (1986)). "A dispute over a material fact is 'genuine' if'a reasonable
juiy could return a verdict for the nonmoving party. Id. (quoting Anderson, 477 U.S. at
248). "After making all reasonable inferences in the nonmoving party's favor, there is a
genuine issue of material fact if a reasonable jury could find for the nonmoving party.
Pignataro v. PortAuth. of New York & New Jersey, 593 F.3d 265, 268 (3d Cir. 2010). The
Court's role at the summary judgment stage "is 'not... to weigh the evidence and determine
the truth of the matter but to determine whether there is a genuine issue for trial.'" Baloga
v. Pittston Area Sch. Dist., 921 F.3d 742, 752 (3d Cir. 2019) (quoting Anderson, 477 U.S.
at 249).
The party moving for summary judgment bears the initial burden of showing the
basis for its motion and identifying those portions of the record which it believes
demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). If the moving party meets its burden, the burden then shifts to the
non-moving party to "come forward with specific facts showing that there is a genuine
issue for tried and do more than simply show that there is some metaphysical doubt as to
the material facts." United States v. Donovan, 661 F3d 174, 185 (3d Cir. 2011) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)) (emphasis
in original and internal quotation marks omitted). "[U]nsupported assertions, speculation,
or conclusory allegations" are insufficient to defeat a summary judgment motion.
Longstreet v. Holy Spirit Hosp., 67 F. App'x 123, 126 (3d. Cir. 2003). "[T]here must be
evidence on which the jury could reasonably find for the [non-movant]." Anderson, 477
U.S. at 252.
B. Monetary Penalty
Section 21A of the Securities Exchange Act authorizes the court to impose civil
monetary penalties on a person who has engaged in insider trading. 15 U.S.C. § 78u-l(a).
"The civil penalty is intended to serve as a deterrent mechanism, because dlsgorgement of
profits alone 'merely restores a defendant to his original position without extracting a real
penalty for his illegal behavior."' U.S. S.E.C. v. Clay Cap. Mgmt., LLC, No. 11-05020,
2013 WL 5946989, at ^7 (D.NJ. Nov. 6, 2013) (citing H.R.Rep. No. 98-355, 98th Cong.,
2d Sess., 7-8 (1984), reprinted in 1984 U.S.C.A.A.N. 2274, 2280-81). "The decision
whether to impose a monetary penalty that goes beyond disgorgement of illegal profits in
order to serve the goal of deterrence rests in the sound discretion of the Court." S.E.C. v.

Mellert, No. 03-0619, 2006 WL 927743, at ^\ (N.D. Cal. Mar. 29, 2006) (citing 5f.£.C. v.
Sargent, 329 F.3d 34, 42 n. 2 (1st Cir. 2003)). "[A] civil action brought by the SEC for a
civil penalty (may be brought in addition to any other actions that the Commission or the
Attorney General are entitled to bring." S.E.C. v. Rajaratnam; 918 F.3d 36, 46 (2d Clr.
2019) (citing Section 2 lA(d)(3) (titled "Remedy not exclusive") (emphasis added)). "Thus,
Congress expressly anticipated that at least some insider traders would face both criminal
and civil penalties." Id. (citing S.E.C. v. Gupta, 569 F. App'x 45, 48 (2d Cir. 2014)
(rejecting argument that treble penalty was inappropriate in light of criminal penalties
already imposed)).
The amount of the civil penalty "shall be determined by the court in light of the facts
and circumstances, but shall not exceed three times the profit gained or loss avoided as a
result of ^ the insider-trading activity. See 15 U.S.C. § 78u-~l(a)(2). To determine the
amount of a civil penalty, courts examine several factors, including: "(I) the egregiousness
of the defendant's violations; (2) the isolated or recurrent nature of the violations; (3) the
degree of scienter; (4) the amount of illegal profits; and (5) the deterrent effect of the
penalty in light of defendant's net worth." Clay Cap. Mgmf., 2013 WL 5946989, at ^7
(citing S.E.C. v. Jo/wson, No. 02-5490, 2004 WL 5561799 at ^5 (D.N.J, Aug. 27, 2004),
affdas modified 174 F. App'x 111 (2006)).
First, while Levoff was not living excessively, his violations were nonetheless
especially egregious given that he was the chair of the Apple's Disclosure Committee and
his very Job was to ensure compliance with securities laws and applicable trading
restrictions. His misconduct was not only a breach of fiduciary duty to Apple, but also a
betrayal of the market more broadly, which depends on experienced attorneys like Levoff
to guide public companies and ensure lawful conduct. See S.E.C, v. Gunn, No. 08-1013,
2010 WL 3359465, at iii4 (N.D. Tex. Aug. 25,2010) (noting factors that other federal courts
have considered in deeming violation of federal securities laws to be egregious include
whether defendant's violation was breach of fiduciary duty and also whether violation was
"flagrant and deliberate" rather than "merely technical in nature" (internal citations
omitted)).
Second, Levoffhas no prior record of securities violations but the illegal trades that
he pled guilty to were recurrent over a ten-month period. See S.E. C. v. Heart Tronics, Inc.,
No. 11-1962,2016 WL 9049642, at ^4 (C.D, Cal. Mar. 30,2016), (noting "violations were
not isolated but recurrent: Gault served as [CEO] . . . for only three months, and, during
those three months, Gault committed three independent violations"), ciffdszib now. S.E.C.
v. Gault, 751 F. App'x 974 (9th Clr. 2018).
As to the third factor, Levoffs actions were deliberate with a high degree ofscienter.
Levoffis a seasoned lawyer with a law degree from Stanford University who pled to having

engaged in insider trading knowingly and willfully. His mental disorders do not erase his
intent. In fact, Levoff describes his securities violations as acts ofself-sabotage;" he did
something "so obviously wrong" so that on some level, he was trying to get caught. Def.
Br. at 17. Thus, regardless of why he was trying to get caught, he acted knowingly and
willfully. In this context, Levoffs lack of efforts to conceal his misconduct does not
evidence low scienter as much as it consistent with his theory ofself-sabotage.
Only the fourth factor weighs in Levoffs favor. The amount of illegal profits and
avoided losses was $382,480, substantially less than at issue In typical civil penalty cases.
See e.g., S.E.C. v. Zvodihikov, No. 16-845, 2020 WL 634184, at ^6 (D.NJ. Feb. 10, 2020)
(disgorgement amount of over $9.6 million); S.E.C. v. Chester Holdings, Ltd., 41 F.Supp.
2d 505, 529 (D.N.J. 1999) (disgorgement of over $2.1 million).
Lastly, although the Court previously considered the deterrent effect of a custodial
sentence in light ofLevoffs forfeiture and loss of his career and reputation, see Sentencing
Tr. 33:20-34:11; 34:24-35:4, the fifth factor examines the deterrent effect of the civil
monetary penalty In light of defendant's net worth. "[A] defendant's net worth is a critical
factor In determining the amount of civil penalty to award." Clay Cap. Mgmt., 2013 WL
5946989, at ii;8; Rajaratnam, 918 F.3d at 45 ("[OJther circuits have explicitly approved the
consideration of a defendant's wealth in imposing a civil penalty under Section 21A."
(collecting cases)); but see Mellert, 2006 WL 927743, at ^\ (noting that "ability to pay
alone cannot tip the balance in favor of the imposition of a civil penalty where other factors
are lacking"). As of the date of the Final Presentence Report, Levoffs net worth was more
than $13 million. Marino Cert. ^ 5 (Presentence Investigation Report at 35). In light of
Defendant's high net worth, the SEC's requested penalty of $1,147,440 (3x profit obtained
or loss avoided) is an appropriate financial penalty to serve as a deterrent effect. Compare,
Johnson, 2004 WL 5561799, at *5 (imposing penalty of $120,000 where Illegal profits
were $42^262, securities violations were egregious, defendant had high net worth, acted
with scienter, committed previous breaches of fiduciary duty, and was not cooperative or
honest with authorities), with Clay Cap. Mgmt., 2013 WL 5946989, at sii8 (finding that
substantial civil monetary penalty was not appropriate given (1) defendant's precarious
financial condition; (2) lack of evidence showing any personal economic benefit; and (3)
that offense was defendant's first violation of securities laws and appeared to be isolated
incident). Given the facts and circumstances of this case, the civil monetary penalty will
not be offset by the criminal forfeiture or fine. See e.g. Rajaratnam., 918 F.3d at 46-47
(affirming district court's Imposition of civil penalty of over $92.8 million (maximum
permissible under statute) without offsetting $53.8 million forfeiture and fine of additional
$10 million criminal penalty because court found that in light of facts and circumstances,
civil penalty had to be set at level that would show defendant and others that such lucrative
insider trading is a "money-losing proposition.").

m.
CONCLUSION
For the reasons noted above, the SEC's motion for summary judgment is granted.
Defendant's cross motion for summary judgment is denied.
%^^
^ wfLi^rfvi j. MARTINI, U.S.D.J.
Date: July 2, 2024
J

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION,

Plaintiff,

V.

GENE DANIEL LEVOFF,

Defendants.

Civ. No. 2:19-cv-05536 (WJM)

OPINION

WILLIAM J. MARTINI, U.S.DJ.:

In this action by the United States Securities and Exchange Commission ("SEC or
"Plaintiff) against Gene Daniel Levoff("Levoff or "Defendant") for insider trading, the

SEC moves for summary judgment pursuant to Fed. R. Civ. P. 56. ECF No. 22. Defendant
cross moves for summary judgment. For the reasons set forth below, the SEC's motion for

summary judgment is granted. Defendant's cross motion for summary judgment is

denied.

I. BACKGROUND AND PROCEDURAL HISTORY

From 2008 to 2013, Levoffwas Director of Corporate Law at Apple. SEC Statement
of Undisputed Material Facts ("SEC SUMF") ^ 1, ECF No. 22-2. From 2013 until his
termination in September of 2018, he was Senior Director of Corporate Law at Apple,
reporting directly to the General Counsel. Id. Levoffalso served on Apple's Disclosure
Committee from September 2008 to July 2018, including as chair of the committee from
December 2012 to July 2018. Id. at ^ 1, 5. Thus, he had access to and obtained Apple's

draft SEC filings and earnings materials before Apple disclosed its quarterly and yearly
financial results to the public. Id. Levoff was subject to certain company-imposed
"blackout periods" that prohibited him and others like him with access to material

nonpublic information from engaging in trades involving Apple stock. Id at ^ 6. From
approximately February 2018 until September 2018, Levoffwas also Apple's Corporate
Secretary. Id. at ^| 4. I-Iis responsibilities included ensuring compliance with Apple's Insider
Trading Policy, which prohibited the unauthorized disclose of any nonpublic information
acquired in the workplace and the misuse of material nonpublic information in securities

trading. Id.

From at least as early as April of 2011 through at least as late as April of 2016,
Levoff converted the material nonpublic information regarding Apple to his own use by
executing trades involving Apple stock in his accounts in violation of Apple's Insider

1

Case 2:19-cv-05536-WJM-SDA   Document 30   Filed 07/02/24   Page 1 of 6 PageID: 513



Trading Policy and during Apple blackout periods, realizing profits and avoided losses of
over $600,000. Id. at fl 7,9,10.

On February 13, 2019, a criminal complaint was filed against Levoff(Wv. Levoff,

19-cr-00780). DecL of Elizabeth Daisy ("Daisy Decl.") 1[ 2 (Grim. CompL), ECF No. 22-
3. On October 24, 2019, a federal grand jury returned a twelve-count Indictment charging
Levoff with securities fraud and wire fraud in connection with purchase and sale
transactions in Apple stock in 2015 and 2016. Cert. of Kevin Marino ("Marino Cert."), ^ 3

(Indictment), ECF No. 27; Levoff Statement of Undisputed Material Fact ("Def. SUMF")
Tf 2. On June 30, 2022, Levoff entered into an agreement, pleading guilty to Counts 1-6 of
the Indictment, and to securities fraud in violation of 15 U.S.C. § 78j(b), 17 C.F.R. §

240.10b-5, 18 U.S.C. §2, and other provisions. Daisy Decl.T; 3 (Plea Agmt); SEC SUMF
^ 2. Levoff admitted that in furtherance of the scheme described in the Indictment, he acted

knowingly and willfully in connection with the trades he placed including:

A. On July 17, 2015, Levoffsold approximately 43,750 shares of Apple stock;

B. On July 17, 2015, Levoffsold approximately 8,700 shares of Apple stock;

C. On July 20, 2015, Levoffsold approximately 7,000 shares of Apple stock;

D. On July 21, 2015, Levoffsold approximately 17,678 shares of Apple stock;

E. On October 26, 2015, Levoff purchased approximately 10,000 shares of Apple

stock;

F. On April 21, 2016, Levoffsold approximately 4,009 shares of Apple stock.

SEC SUMF ^ 2, 10. The total ofLevoffs profits and losses avoided for Trades A through
F above is $382,480. Id. at T[ 11.

On December 11, 2023, Levoffwas sentenced to four years' probation, 2,000 hours
of community service, a fine of $30,000, and forfeiture of $604,000 in realized gains and
avoided losses alleged in the Indictment. Def. SUMF ^ 4; Sentencing Tr. 35:16-37:12. The
forfeiture has been satisfied. Marino Cert. ^ 6 (Satisfaction of Judgment).

Because Levoff has admitted to engaging in Insider trading, the SEC moves for
summary judgment on the grounds that Levoffis collaterally estopped from re-litigating
those issues and thus there are no genuine issues of material fact. Moreover, the SEC deems

disgorgement of $382,480 and prejudgment interest of $57,465 satisfied by Levoffs
forfeiture payment. Levoff does not challenge finding him liable for insider trading,
enjoining him from further violations of the securities laws, and permanently barring him
from serving as an officer or director of a public company. The only dispute is whether,
Levoff should be ordered to pay a penalty of $1,147,440 - treble Levoffs profit obtained
or loss avoided. As discussed below, the SEC's requested monetary penalty is granted.

Case 2:19-cv-05536-WJM-SDA   Document 30   Filed 07/02/24   Page 2 of 6 PageID: 514



II. DISCUSSION

A. Standard

Federal Rule of Civil Procedure 56(a) provides that summary judgment is proper
when "the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." "A fact is 'material' ... if its existence

or nonexistence might Impact the outcome of the suit under the applicable substantive law."

SantM v. Fzientes, 795 F.3d 410, 416 (3d Cir. 2015) (quoting Anderson v. Liberty Lobby,
Inc. ,477 U.S. 242,248 (1986)). "A dispute over a material fact is 'genuine' if'a reasonable

juiy could return a verdict for the nonmoving party. Id. (quoting Anderson, 477 U.S. at
248). "After making all reasonable inferences in the nonmoving party's favor, there is a
genuine issue of material fact if a reasonable jury could find for the nonmoving party.
Pignataro v. PortAuth. of New York & New Jersey, 593 F.3d 265, 268 (3d Cir. 2010). The
Court's role at the summary judgment stage "is 'not... to weigh the evidence and determine

the truth of the matter but to determine whether there is a genuine issue for trial.'" Baloga
v. Pittston Area Sch. Dist., 921 F.3d 742, 752 (3d Cir. 2019) (quoting Anderson, 477 U.S.

at 249).

The party moving for summary judgment bears the initial burden of showing the
basis for its motion and identifying those portions of the record which it believes

demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477

U.S. 317, 323 (1986). If the moving party meets its burden, the burden then shifts to the
non-moving party to "come forward with specific facts showing that there is a genuine
issue for tried and do more than simply show that there is some metaphysical doubt as to

the material facts." United States v. Donovan, 661 F3d 174, 185 (3d Cir. 2011) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)) (emphasis
in original and internal quotation marks omitted). "[U]nsupported assertions, speculation,
or conclusory allegations" are insufficient to defeat a summary judgment motion.
Longstreet v. Holy Spirit Hosp., 67 F. App'x 123, 126 (3d. Cir. 2003). "[T]here must be

evidence on which the jury could reasonably find for the [non-movant]." Anderson, 477
U.S. at 252.

B. Monetary Penalty

Section 21A of the Securities Exchange Act authorizes the court to impose civil

monetary penalties on a person who has engaged in insider trading. 15 U.S.C. § 78u-l(a).
"The civil penalty is intended to serve as a deterrent mechanism, because dlsgorgement of
profits alone 'merely restores a defendant to his original position without extracting a real

penalty for his illegal behavior."' U.S. S.E.C. v. Clay Cap. Mgmt., LLC, No. 11-05020,
2013 WL 5946989, at ^7 (D.NJ. Nov. 6, 2013) (citing H.R.Rep. No. 98-355, 98th Cong.,
2d Sess., 7-8 (1984), reprinted in 1984 U.S.C.A.A.N. 2274, 2280-81). "The decision
whether to impose a monetary penalty that goes beyond disgorgement of illegal profits in
order to serve the goal of deterrence rests in the sound discretion of the Court." S.E.C. v.

Case 2:19-cv-05536-WJM-SDA   Document 30   Filed 07/02/24   Page 3 of 6 PageID: 515



Mellert, No. 03-0619, 2006 WL 927743, at ^\ (N.D. Cal. Mar. 29, 2006) (citing 5f.£.C. v.

Sargent, 329 F.3d 34, 42 n. 2 (1st Cir. 2003)). "[A] civil action brought by the SEC for a
civil penalty (may be brought in addition to any other actions that the Commission or the

Attorney General are entitled to bring." S.E.C. v. Rajaratnam; 918 F.3d 36, 46 (2d Clr.
2019) (citing Section 2 lA(d)(3) (titled "Remedy not exclusive") (emphasis added)). "Thus,
Congress expressly anticipated that at least some insider traders would face both criminal

and civil penalties." Id. (citing S.E.C. v. Gupta, 569 F. App'x 45, 48 (2d Cir. 2014)

(rejecting argument that treble penalty was inappropriate in light of criminal penalties
already imposed)).

The amount of the civil penalty "shall be determined by the court in light of the facts
and circumstances, but shall not exceed three times the profit gained or loss avoided as a

result of ^ the insider-trading activity. See 15 U.S.C. § 78u-~l(a)(2). To determine the

amount of a civil penalty, courts examine several factors, including: "(I) the egregiousness

of the defendant's violations; (2) the isolated or recurrent nature of the violations; (3) the

degree of scienter; (4) the amount of illegal profits; and (5) the deterrent effect of the
penalty in light of defendant's net worth." Clay Cap. Mgmf., 2013 WL 5946989, at ^7

(citing S.E.C. v. Jo/wson, No. 02-5490, 2004 WL 5561799 at ^5 (D.N.J, Aug. 27, 2004),

affdas modified 174 F. App'x 111 (2006)).

First, while Levoff was not living excessively, his violations were nonetheless

especially egregious given that he was the chair of the Apple's Disclosure Committee and

his very Job was to ensure compliance with securities laws and applicable trading

restrictions. His misconduct was not only a breach of fiduciary duty to Apple, but also a

betrayal of the market more broadly, which depends on experienced attorneys like Levoff

to guide public companies and ensure lawful conduct. See S.E.C, v. Gunn, No. 08-1013,

2010 WL 3359465, at iii4 (N.D. Tex. Aug. 25,2010) (noting factors that other federal courts

have considered in deeming violation of federal securities laws to be egregious include

whether defendant's violation was breach of fiduciary duty and also whether violation was

"flagrant and deliberate" rather than "merely technical in nature" (internal citations

omitted)).

Second, Levoffhas no prior record of securities violations but the illegal trades that

he pled guilty to were recurrent over a ten-month period. See S.E. C. v. Heart Tronics, Inc.,

No. 11-1962,2016 WL 9049642, at ^4 (C.D, Cal. Mar. 30,2016), (noting "violations were

not isolated but recurrent: Gault served as [CEO] . . . for only three months, and, during

those three months, Gault committed three independent violations"), ciffdszib now. S.E.C.

v. Gault, 751 F. App'x 974 (9th Clr. 2018).

As to the third factor, Levoffs actions were deliberate with a high degree ofscienter.

Levoffis a seasoned lawyer with a law degree from Stanford University who pled to having

Case 2:19-cv-05536-WJM-SDA   Document 30   Filed 07/02/24   Page 4 of 6 PageID: 516



engaged in insider trading knowingly and willfully. His mental disorders do not erase his

intent. In fact, Levoff describes his securities violations as acts ofself-sabotage;" he did

something "so obviously wrong" so that on some level, he was trying to get caught. Def.

Br. at 17. Thus, regardless of why he was trying to get caught, he acted knowingly and

willfully. In this context, Levoffs lack of efforts to conceal his misconduct does not

evidence low scienter as much as it consistent with his theory ofself-sabotage.

Only the fourth factor weighs in Levoffs favor. The amount of illegal profits and

avoided losses was $382,480, substantially less than at issue In typical civil penalty cases.

See e.g., S.E.C. v. Zvodihikov, No. 16-845, 2020 WL 634184, at ^6 (D.NJ. Feb. 10, 2020)

(disgorgement amount of over $9.6 million); S.E.C. v. Chester Holdings, Ltd., 41 F.Supp.

2d 505, 529 (D.N.J. 1999) (disgorgement of over $2.1 million).

Lastly, although the Court previously considered the deterrent effect of a custodial

sentence in light ofLevoffs forfeiture and loss of his career and reputation, see Sentencing

Tr. 33:20-34:11; 34:24-35:4, the fifth factor examines the deterrent effect of the civil

monetary penalty In light of defendant's net worth. "[A] defendant's net worth is a critical

factor In determining the amount of civil penalty to award." Clay Cap. Mgmt., 2013 WL

5946989, at ii;8; Rajaratnam, 918 F.3d at 45 ("[OJther circuits have explicitly approved the
consideration of a defendant's wealth in imposing a civil penalty under Section 21A."

(collecting cases)); but see Mellert, 2006 WL 927743, at ^\ (noting that "ability to pay
alone cannot tip the balance in favor of the imposition of a civil penalty where other factors

are lacking"). As of the date of the Final Presentence Report, Levoffs net worth was more

than $13 million. Marino Cert. ^ 5 (Presentence Investigation Report at 35). In light of
Defendant's high net worth, the SEC's requested penalty of $1,147,440 (3x profit obtained

or loss avoided) is an appropriate financial penalty to serve as a deterrent effect. Compare,

Johnson, 2004 WL 5561799, at *5 (imposing penalty of $120,000 where Illegal profits
were $42^262, securities violations were egregious, defendant had high net worth, acted

with scienter, committed previous breaches of fiduciary duty, and was not cooperative or

honest with authorities), with Clay Cap. Mgmt., 2013 WL 5946989, at sii8 (finding that
substantial civil monetary penalty was not appropriate given (1) defendant's precarious

financial condition; (2) lack of evidence showing any personal economic benefit; and (3)
that offense was defendant's first violation of securities laws and appeared to be isolated

incident). Given the facts and circumstances of this case, the civil monetary penalty will

not be offset by the criminal forfeiture or fine. See e.g. Rajaratnam., 918 F.3d at 46-47

(affirming district court's Imposition of civil penalty of over $92.8 million (maximum
permissible under statute) without offsetting $53.8 million forfeiture and fine of additional
$10 million criminal penalty because court found that in light of facts and circumstances,

civil penalty had to be set at level that would show defendant and others that such lucrative

insider trading is a "money-losing proposition.").

Case 2:19-cv-05536-WJM-SDA   Document 30   Filed 07/02/24   Page 5 of 6 PageID: 517



m. CONCLUSION

For the reasons noted above, the SEC's motion for summary judgment is granted.

Defendant's cross motion for summary judgment is denied.

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^ wfLi^rfvi j. MARTINI, U.S.D.J.

Date: July 2, 2024
J

Case 2:19-cv-05536-WJM-SDA   Document 30   Filed 07/02/24   Page 6 of 6 PageID: 518